How long will your money last in retirement?

You're sitting poolside, the sun warming your skin, a cold drink in your hand and not a care on your mind. Now that you're retired, the only things you need to worry about are when to apply more sunscreen and what time you tee off. That is, if you've saved up enough money to enjoy a worry-free retirement.

According to an Employee Benefit Research Institute Survey, about one-third of prospective retirees age 55 and over have less than $10,000 in retirement savings, and around two-thirds have less than $100,000 saved up [source: Ransom]. Those figures, even combined with Social Security and pension payouts (both of which are becoming as endangered as the Bengal tiger), won't carry you comfortably through your golden years.

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Even if you scrupulously saved while you were working, your money may not take you as far as you need it to in retirement if you haven't planned well. A shaky market can leave even the most robust portfolio looking meager. One million dollars can quickly whittle away, especially if it has to last for 25 or 30 more years -- which it might, if you live as long as health experts project. Improvements in health care have made it the norm to reach your late 80s or even 90s.

You can't just count on Social Security, nor should you sock your money away in the bank and investments and hope it will grow enough to last your entire retirement. You need to calculate how long your money will last and build in a little bit of cushion for unexpected emergencies, like an unplanned surgery or the dream trip you never had the chance to cross off your bucket list.

Let's look at the variables you need to consider before you let your coworkers throw you a retirement party.